Today, the precious metals market experienced a significant downturn. Major global stock markets that were open all recorded declines, with the three major Hong Kong stock indices once again suffering substantial losses.
On February 2, 2206, as of the market close, the Hang Seng Index had fallen by over 3.2% at one point during the session, ultimately closing down 2.23%, a sharp drop of more than 600 points. The Hang Seng Tech Index plunged over 4% intraday before finishing 3.36% lower, while the Hang Seng China Enterprises Index declined by 2.54%. The Hang Seng Biotechnology Index also fell more than 3%, dropping 3.70% for the day. Market sectors saw collective weakness in non-ferrous metals, with auto stocks remaining sluggish throughout the session. Semiconductor chip stocks, biopharmaceutical stocks, coal stocks, oil stocks, and insurance stocks all trended lower; conversely, gambling and liquor stocks bucked the trend and moved higher. Hua Tai Securities analysis pointed out that this round of adjustment primarily stems from a technical pullback following the indices' rapid short-term ascent, compounded by sentiment disruptions triggered by hawkish remarks from Federal Reserve Chair nominee Warsh; it is not seen as a signal of a trend reversal. The current core focus lies on the persistence of this volatility. The three key driving logics for the first quarter remain robust: a marginal warming in global monetary policy expectations leading to an improved liquidity environment; upward revisions to corporate earnings expectations, with economic recovery bolstering profit restoration prospects; and a combined force of southbound capital and foreign capital allocation demand.
International gold prices fell sharply during the session, while silver experienced a "cliff-like" drop. In the Hong Kong stock market, gold stocks were hit hard, and non-ferrous metal stocks collectively declined. SD GOLD and CHIFENG GOLD both plummeted over 12%, while Tongguan Gold, Dragon Resources, Lingbao Gold, China Silver Group, and others all closed down more than 8%. The prevailing market view is that the selection of the next Federal Reserve Chair and a potential shift in policy direction served as the trigger for the precious metals plunge. On January 30, US President Trump nominated Kevin Warsh as the next Federal Reserve Chair; Warsh has long been known for his hawkish stance, advocating for interest rate cuts and balance sheet reduction. This was compounded by a resurgence in US Producer Price Index (PPI) figures. On January 30, the US Bureau of Labor Statistics reported that December's PPI rose 0.5% month-on-month, the largest increase in three months, while the core indicator's year-on-year growth rate also climbed to a high for the year, both exceeding market expectations. Furthermore, on January 29, the Federal Reserve's interest rate meeting concluded with the decision to keep the benchmark interest rate unchanged. Specific data showed: US December PPI rose 3% year-on-year, against an expectation of 2.8%; US December Core PPI rose 3.3% year-on-year, against an expectation of 2.9%; US December PPI rose 0.5% month-on-month, against an expectation of 0.2%; US December Core PPI rose 0.7% month-on-month, against an expectation of 0.2%.
Semiconductor stocks were among the leading decliners. HUA HONG SEMI fell over 11%, while GigaDevice, Naxinwei, and Shanghai Fudan also closed lower. On the news front, according to media reports, the three major original manufacturers—Samsung, SK Hynix, and Micron—have tightened their order review processes, conducting stricter due diligence on clients. This includes verifying end-user identities, confirming actual demand quantities, and even questioning the authenticity of orders, in response to potential subsequent market fluctuations that could arise from some clients placing excess orders or hoarding inventory.
Auto stocks remained weak throughout the trading day. Auto stocks were sluggish all day. BYD Company and XPeng dropped nearly 7%, while Leapmotor, NIO, Great Wall, and others closed lower. Data released on February 1 by the China Passenger Car Association (CPCA) showed that from January 1 to 18, national passenger vehicle retail sales decreased 28% year-on-year and fell 37% compared to the previous month's period. The new energy vehicle market also faced pressure, with retail sales during the same period down 16% year-on-year and plunging 52% month-on-month. The reasons cited include the conclusion of the new energy vehicle purchase tax exemption policy at the end of 2025, coupled with year-end promotional campaigns by automakers leading to demand being pulled forward and depleted, resulting in the market entering a demand recovery phase in early 2026. Additionally, the uneven implementation progress of "replace old with new" subsidies across various provinces has further heightened consumer wait-and-see sentiment.
Xifeng Group's share price experienced a flash crash, plummeting over 73%. Xifeng Group's share price showed unusual activity, crashing 73.25% today. Since January, the stock's price had shown a noticeable increase. Regarding news, a company announcement in January indicated that its indirect wholly-owned subsidiary had signed a memorandum of understanding with millimeter-wave radar solution provider Kuangshi Technology. Xifeng Group intends to acquire a 51% controlling stake in Kuangshi Technology through either a share acquisition or a capital increase.
Two pieces of news from official Hong Kong government agencies. First: On February 1, Hong Kong Financial Secretary Paul Chan Mo-po stated in a blog post that overseas companies and investors are strengthening their confidence in investing in Hong Kong. Last year, the number of overseas and mainland companies based in Hong Kong, as well as Hong Kong startups, both increased by over 10%, exceeding 11,000 and 5,200 respectively. According to recent surveys by some foreign chambers of commerce, a majority of their member companies are optimistic about Hong Kong's business prospects, with the proportion expressing positive expectations reaching a new high in recent years. Chan noted that summarizing January's performance, Hong Kong stocks continued their upward trend, with the Hang Seng Index closing at 27,387 points last Friday, accumulating a gain of nearly 7% for the month. The average daily turnover exceeded HKD 272 billion, a 90% increase compared to the same period last year. Even as external volatility intensified, Hong Kong's financial system maintained its robustness and smooth operation, with total bank deposits surpassing HKD 19 trillion.
Second: On February 2, following the 2026 Financial Affairs Committee meeting, Hong Kong Monetary Authority (HKMA) Chief Executive Eddie Yue Wai-man stated that the authority is assessing stablecoin license applications and collecting necessary further application materials from applicants, aiming to issue Hong Kong's first batch of stablecoin issuer licenses by March 2026. Yue also emphasized that the number of licenses in the first batch will "certainly be small," with the goal of licensing being "stability and safety." The HKMA has requested additional application materials from some applicants, such as details on stablecoin use cases, risk management (including anti-money laundering arrangements), or the categories of reserve assets for investment, and will make licensing decisions as soon as possible after receiving all required information.
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